Rowe Predicts High Deductibles Will Grow Even Higher, But Says Carve-Outs Can Ensure Consumers Get Needed Care

BETHESDA, MD—To be more than a transfer of risk from employer to employee, high-deductible “consumer-directed” health plans must be augmented by efforts to make the health care system more transparent, Aetna chief executive officer Jack Rowe says in an interview published today on the Health Affairs Web site.

“Consumer-directed products, by themselves, give employees more financial responsibility but do not necessarily make them more prudent purchasers of health care services,” Rowe tells James Robinson, a Health Affairs contributing editor and the Kaiser Permanente Distinguished Professor of Health Economics at the University of California, Berkeley, School of Public Health. “Consumers are motivated, but they need more information.”

Rowe highlights one of his company’s efforts to provide this information: a Cincinnati-area pilot project in which Aetna is listing the rates primary care physicians charge for particular office procedures. Some physicians have complained that this unit-price information does not capture variables such as the number of times a physician typically sees a patient for a given condition, or the number of laboratory tests a physician tends to order. But “we have to start somewhere,” Rowe says, adding that Aetna “would be pleased” to add to its unit-price information as more complete data become available.

While Aetna is counting on informed patients to make wise choices among primary care physicians, the company’s tiered Aexcel network embodies a different approach toward specialist care, Rowe explains. Aexcel provides discounts when patients see specialist physician groups that Aetna has rated as providing cost-effective, high-quality care, thus essentially making prudent purchasing decisions on behalf of patients. “The consumer can say, ‘This is a better network; this is where I’m going,’” says Rowe.

Some critics of high-deductible health plans have expressed concerns that enrollees might forgo needed care. To combat this, Rowe says, Aetna has exempted the costs of preventive care and medications used to treat chronic diseases from its deductibles, a strategy that seems to be working. “The use of preventive services has increased in these products,” Rowe says, while inpatient hospital admissions and ER visits are down.

Rowe expects such positive results to forestall any regulatory attack on high-deductible policies akin to the famous managed care backlash: “With respect to high-deductible plans … we are moving from the phase of concern and skepticism, perhaps even cynicism, to the phase of evidence.”

Indeed, “we haven’t hit the limit of cost sharing,” says Rowe, who predicts “much higher deductibles” in the small and midsize employer markets. “My sense is that, for many employers, raising the deductible is the alternative to not offering insurance at all.”

As Robinson notes, much of the action so far in consumer-directed insurance products has been in the large-employer market. Rowe, however, suggests that this will change as knowledge of the products trickles down to brokers in the smaller employer market, and in the individual market as well. Consumer-directed products, together with tax-advantaged vehicles such as health savings accounts, “could ultimately facilitate a trend toward more individual-based, and away from employer-based, coverage,” he says.

Health Affairs , published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org. The full text of each Health Affairs Web Exclusive is available free of charge to all Web site visitors for a two-week period following posting, after which it will switch to pay-per-view for nonsubscribers. The abstracts of all articles are free in perpetuity. Web Exclusives are supported in part by a grant from the Commonwealth Fund.